Abstract
Block rate pricing is often applied to income taxation, telecommunication services, and brand marketing, in addition to its best-known application in public utility services. Under block rate pricing, consumers face piecewise-linear budget constraints. A discrete/continuous choice approach is usually used to account for piecewise-linear budget constraints in demand and price endogeneity. A recent study proposed a method to incorporate a separability condition ignored by previous studies, by implementing a Markov chain Monte Carlo simulation based on a hierarchical Bayesian approach. To extend this approach to panel data, our study proposes Bayesian hierarchical models incorporating random and fixed individual effects.
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We greatly appreciate the beneficial comments and suggestions from two anonymous referees and the editorial support from the editor, K. Ohtani (Kobe University). This work is supported by Grants-in-Aid for Scientific Research 21243018 and 22330069 from the Japanese Ministry of Education, Science, Sports, Culture and Technology and by the Academic Frontier Project of the Nihon University Population Research Institute. The authors thank H. Kozumi (Kobe University) and K. Kakamu (Chiba University) for their valuable comments. All computational results were obtained using Ox for Linux (see Doornik, 2002).
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Miyawaki, K., Omori, Y. & Hibiki, A. Panel Data Analysis of Japanese Residential Water Demand Using a Discrete/Continuous Choice Approach. JER 62, 365–386 (2011). https://doi.org/10.1111/j.1468-5876.2010.00532.x
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DOI: https://doi.org/10.1111/j.1468-5876.2010.00532.x